A look into property division laws in Ontario. Learn about costs, unequal division and more.

1. PROPERTY DIVISION
• when entering a new relationship or thinking about separation, it is
important to know your rights, know what you are entitled to if the
relationship ends… possible to plan ahead and protect your rights…
when entering a relationship
• not as easy as people think
• not necessarily 50/50 division/ many factors to consider
1

2. • s. 5 of the FLA says that the provisions wrt property division is only wrt
“spouses” which are married / FLA property division not relate to CL
spouses
• FLA deals with married spouses / no fixed rules govern the division of
property for CL spouses
• CL spouse’s property division based on concept of “joint family venure”
1

3. • For married spouses - upon separation (or the death of a spouse)
married spouses (or the surviving spouse) are entitled to a division of
property acquired during the marriage
• Property is divided based on ownership and the value of the property
• The property itself is not divided
• Basically, each party determines his / her net worth (assets less debts)
as of the date of marriage and the date of separation
1

4. • Whoever has the greater difference in his / her net worth from the
date of marriage to the date of separation (Net Family Property), will
owe the other party an equalization payment / ONE-HALF of the
difference bw the parties NFP / the person with the higher NFP will pay
the person with the lesser NFP / it is a debt owing by one spouse to
the other spouse
• The purpose is to equalize their respective differences in the increase
in their net worths, from the date of marriage to the date of separation
• The payment is called an equalization payment
1

5. • eg. If the Husband NFP is $100k (increase in his net worth from the
DOM to the DOS) and the Wife’s NFP is $50k (increase in her net worth
from the DOM to the DOS) – what is the equalization payment owing
from the Husband to the Wife?
• $100k - $50k = $50k/2 = $25k – The Husband pays the Wife $25k so
that each person leaves the marriage with an NFP or $75k
1

6. Steps To Determine NFP
• What property did you own on the DOS / less the debts you owed on
the DOS / less excluded property (gifts, inheritances etc.), / less
property owned on the DOM / less value of the debts owed on the
DOM = NFP
• Determine which spouse has the higher NFP
• Larger NFP less small NFP / 2 = Equalization payment
• EP – what one spouse pays the other spouse to equalize their NFP
1

7. • A judge is not going to examine all of the transactions during the
marriage, unless the “transactions” were harmful or unconscionable
(eg. Gambling, drugs etc.)
• ie – we had a case where one spouse, gambled a large amount of the
parties assets and lost, it was very offensive to the court and it was
something the court considered in evaluating the property claim of the
gambler
1

8. • The court first determines the value of a parties assets and debts on
the date of marriage and then determines the value on the date of
separation – the fluctuation of the value of the asset or the parties
during the marriage (unless there was fraud) during the marriage is not
important/
• It is a “snapshot in time” - the date of marriage and the date of
separation
1

9. • Don’t have to have one spouse move out of the house in order for
their to be a separation
• Only once there is a permanent separation, does it trigger the division
of property
• Physical separation is one part/ but if still go to counseling or still have
an ongoing relationship, may argue that there is not a separation
• Or may be living separate and apart, and just bc you go on a vacation
with your spouse and kids does not necessarily mean that there has
been a reconciliation
1

10. Tests For Date Of Separation
• Are they having sex / Are the parties living separate lives / are they
cohabiting / do they cook and clean for each other / go out socially /
do people know that they are separated / - all kinds of indicia
• Important bc sometimes the values of assets can fluctuate on the date
of separation
1

11. • Property – what is property?
• FLA has a very broad definition/ “any interest, present or future,
vested or contingent, in real or personal property”
• Includes a ‘spouses right under a pension plan that has vested
• Eg - Land, bank accounts, cars, jewelry, stocks, bonds, shares,
mortgages, AR, and anything that has value
1

12. • NFP defined as the value of all of the person’s property on the date of
separation (with the exception of some property – excluded property
to be discussed) less the spouse’s debts and liabilities as of the date of
separation less net worth of party on the date of marriage (but not
considering the value or mortgage of the matrimonial home, if owned
on both the date of separation and the date of marriage – we will look
at mat home soon)
• Only look at the value of assets/ debts as of these two dates: date of
marriage and the date of separation
• Ups and downs of a parties finances during the marriage is essentially
ignored
1

13. Matrimonial Home
• The definition of a matrimonial home is a property that one of the
spouse’s has an interest in (has to be owned somewhat by one of the
spouses… , can’t be owned solely by parents)… and was “ordinarily
occupied” by the spouses on the date of their separation (FLA – s. 18)
1

14. Can you have more than two matrimonial homes?
• Spouses can “ordinarily occupy” more than one property / eg. a
cottage and a house – can have two matrimonial homes
1

15. • Bc the matrimonial home is considered special property, you cannot
deduct the value of the matrimonial home owned as of the date of
marriage from you NFP, if it is the same residence that you owned as
of the date of separation / also don’t consider mortgages or debts
associated with the mat home as of the date of marriage if it is the
same residence as of the date of separation / only consider the value
of the matrimonial home as of the date of separation don’t look at
DOM value in determining NFP of party / therefore, if the house is
worth $500k on the date of separation (assuming no mortgage) but
was only worth $300k on the date of marriage, you would share $500k
with your spouse not the increase in value or $200k
1

16. Cost of Disposition / Contingent Liabilities
• Court of Appeal decision – Sengmueller v. Sengmueller – The court
held that must look at the net value of the asset as of the date of
separation/ costs of disposition must be shared bt the spouses - but is
it dependent on the nature of the asset and the evidence as to when
the asset is going to get sold / if the taxes or cost of disposition are
reasonable foreseeable when the asset is sold, the court should
consider the present value of the tax debt in determining the value of
the asset
1

17. Excluded Property
• Some property is not part of a party’s net family property/ it is
considered excluded property
• Cannot be a matrimonial home
• Most important is a gift or inheritance from a third person that was
acquired during the marriage and can trace this property into property
existing as of the date of separation (must be AFTER the wedding)
• Tracing is very important – say inherit $1 million during the marriage,
but spent it and $ got mixed with other accounts, can’t really trace it to
the date of separation? – no exclusion unless can tract the monies to
an asset existing as of the DOS
1

18. Unequal division
• Usually determine the parties NFP and pay an equalization payment
from one party to the other party in order to equalize their NFP
• What if it would be unfair to equalize the parties NFP/ not fair to have
one party pay the other an equalization payment?
• Possible that the court could say that it would be “unconscionable” to
divide the difference in the parties NFP equally
• Very high threshold/ “shocking to the conscience of the court” (Levan
v. Levan) – not done often
1

19. Marriage Contract
• Parties have certain rights and obligations wrt division of property
pursuant to the FLA
• What can a marriage contract do? What is the purpose?
• All rights can be modified by way of a marriage contact/ any provision
wrt division of property can be changed if the parties agree
1

20. • Can they also say that bc the other spouse has no interest in a house
being brought into the marriage if they separate and it is a matrimonial
home? Yes – can contract out of those provisions of the FLA
• Can they say in the marriage contract that if we separate, and you live
in the house that I brought into the marriage, you must leave
immediately? No – the only thing you cannot contract out of is the
possession of the mat home/
• Can address custody/access issues in a marriage contract – not binding
on the court/ support issues are also not binding and can be
challenged1
• In order to have a valid marriage contract, must be signed, witnessed,
in writing, must be done voluntarily and with full financial disclosure/
also important to have ILA so that everyone understands his or her
rights
1

21. • When can a court set aside a marriage contract? One spouse lied
about his/her financial situation when the agreement was made/ one
side was pressured to sign the Agreement/ you did not understand the
agreement when it was signed/ the agreement is extremely unfair
1